Monday, April 7, 2008
Financial press starting to recognize the obvious
"So what should a central bank do? It should seek to stabilise a broad price index, which should include not only oil and food but also a realistic measure of property prices. By this I do not mean a rental component but some element of the residential property market itself. In the UK, the all-items retail price index is one such measure (since it includes mortgages). I know that broad inflation indices are annoying from a central bank’s perspective. Those indices do not react well to policy action. But the goal of monetary policy surely cannot be to make life easy for central bankers." And who was it that switched the inflation target from RPI to CPI?